Today’s Agenda…

1. Challenge of e-Adoption in the East MidlandsEast Midlands Small Business e-Adoption Survey 2005Summary FindingsProduced by: E a s t M i d l a n d s D e v e l o p m e n t A g e n c y

2. Today’s Agenda… • Background to the survey • Summary report presented in 7 sections • Opportunity for questions and feedback • Next Steps E a s t M i d l a n d s D e v e l o p m e n t A g e n c y

3. Background to the SurveySurvey Objectives • Provide estimates of levels of e-adoption amongst the SME population in the East Midlands and track over time • Provide an understanding of levels of ownership and integration of ICTs by businesses across all their business processes • Identify any trends towards reverse e-adoption • Provide attitudinal data on the drivers and barriers to e-adoption • Identify the main enablers and barriers to successful ICT implementation • Provide estimates of levels of ICT skills and of future demand for ICT training • Explore the use of ICT suppliers E a s t M i d l a n d s D e v e l o p m e n t A g e n c y

4. Background to the SurveyMethodology • 2000 interviews were conducted during May and June 2005 • 400 interviews completed in each of five sub-regions: • Derbyshire • Nottinghamshire • Lincolnshire (and Rutland) • Leicestershire • Northamptonshire • Data weighted to reflect 241,515 businesses in E.Midlands • Error margin based on the 95% Confidence Interval • ± 2.2 % for the entire region • ± 4.9 % for the sub-regions E a s t M i d l a n d s D e v e l o p m e n t A g e n c y

5. Background to the SurveyProject Outputs • Summary Report and Presentation • Main Report and Findings • Website dedicated to the survey, including: • Main report in html • Full search functionality • PDF version of main report and individual PDFs for sub-sections • Search the Results tool for bespoke analysis • Links to other relevant UK and international e-Adoption Surveys • To be located at www.ebusinessclub.biz/stats E a s t M i d l a n d s D e v e l o p m e n t A g e n c y

6. Summary ReportMain Sections… • Technology and Levels of Adoption • Broadband • Integration of e-Business Technologies • The Value of e-Business • Attitudes to Present and Future Adoption • Skills and Training • Awareness and Use of e-Business Support and Advice E a s t M i d l a n d s D e v e l o p m e n t A g e n c y

7. Section 1Technology and Levels of Adoption • Ownership and use of ICT infrastructure • PCs, Internet, email, LAN, WAN, intranet, etc. • Measurement of core adoption progress from previous surveys E a s t M i d l a n d s D e v e l o p m e n t A g e n c y

8. Fact: Technology adoption has risen across key indicators % of companies adopting technologies (2002 – 2005) • There is no sign of reverse adoption at a regional level • Increased use of LAN could be due to broadband adoption but provides new potential for improved use of data • VOIP is already used by 2% of businesses • EDI is in decline – probably being replaced by hosted ASP solutions Respondents: All Businesses (73%) E a s t M i d l a n d s D e v e l o p m e n t A g e n c y

9. Fact: Northamptonshire has highest ICT adoption level % of businesses adopting technologies by region • Derbyshire lags in the adoption of most internet technologies – its internet connectivity is extremely low • Northamptonshire leads in most measures of adoption and use Respondents: All Businesses (73%) E a s t M i d l a n d s D e v e l o p m e n t A g e n c y

10. Fact: Most businesses make daily use of a PC % of employees making daily use of personal computers or laptops at work • The PC ownership level has remained steady since 2003 • 30% of companies do not have PCs or a laptop • In a third of businesses 75% - 100% of employees use PCs or laptops daily Respondents: All Businesses (100%) E a s t M i d l a n d s D e v e l o p m e n t A g e n c y

11. Fact: Businesses are moving up the adoption ladder The E-Adoption Ladder (2005 vs. 2003) • Levels of sophisticated use of e-business are on the rise, particularly at the higher levels • This method of analysis, whilst useful in previous years, now struggles to provide the level of granularity needed for assessing advanced application of e-business 2005 2003 Respondents: All Businesses (100%) E a s t M i d l a n d s D e v e l o p m e n t A g e n c y

12. Section 2Broadband • Growth in broadband adoption • Types of broadband connection used • Understanding of connection speeds • Likelihood to upgrade to faster broadband • Use of mobile internet connections • Influence of public sector promotion E a s t M i d l a n d s D e v e l o p m e n t A g e n c y

13. Connected All Businesses Businesses Broadband B’band ISDN Dial Up Don’t Total Know Derbyshire 70% 32% 2% 9% 3% 46% Leicestershire 71% 42% 1% 14% 3% 59% Lincolnshire and 63% 38% 3% 18% 3% 61% Rutland Northamptonshire 76% 49% 2% 11% 2% 64% Nottinghamshire 69% 40% 2% 15% 1% 59% Total for EM 69% 40% 2% 14% 2% 59% Fact: Broadband levels highest in Northamptonshire Connection Type by Region • 40% of all businesses in the East Midlands have a broadband internet connection • This is an increase of 22% since 2003 (18%) and 30% since 2002 (10%) • Now at least 2 in every 3 internet connections are broadband. Respondents: Businesses with internet access (59%) and all PC users (73%) E a s t M i d l a n d s D e v e l o p m e n t A g e n c y

14. Fact: Government broadband promotion awareness is inconsistent Exposure to Government Broadband Advertising By Region • Levels of awareness of government-led broadband advertising do not appear to be directly related to broadband adoption levels • Northamptonshire has the lowest level of awareness but has the highest level of adoption • This level of recall is not surprising given the nature of the campaign Respondents: Connected businesses (59%) E a s t M i d l a n d s D e v e l o p m e n t A g e n c y

15. Fact: Broadband adoption rates correspond with connectivity rates Broadband Adoption by Sector • There are wide variations in broadband adoption by sector • Business Services have high rates of connectivity and broadband adoption • Broadband adoption has reached around 2/3rds of connected businesses • The primary issue in terms of sectoral variation is internet connectivity Respondents: All PC Users (73%) *: Sample size not robust E a s t M i d l a n d s D e v e l o p m e n t A g e n c y

16. Fact: ADSL is the most popular connection method Internet Connection Type • ADSL has now passed dial-up as the most popular method of internet connection • 11% of business don’t know what type of broadband connection they have – this is a quarter of all broadband connectors Respondents: Connected businesses (59%) E a s t M i d l a n d s D e v e l o p m e n t A g e n c y

17. Fact: The rate of broadband adoption has slowed in last 6 months Duration of Broadband Connection • There have been fewer new broadband connections in the past 6 months than in the previous 6 months • The length of time a business has had broadband is a strong indicator of level of sophistication of use Respondents: Broadband users (40%) E a s t M i d l a n d s D e v e l o p m e n t A g e n c y

18. Fact: Most businesses don’t know their connection speed Connection Speed • It would appear that 1Mbits is the most popular connection speed • With half of all broadband users not knowing what speed they connect at this result is less than conclusive Respondents: Broadband users (40%) E a s t M i d l a n d s D e v e l o p m e n t A g e n c y

19. Fact: 60% of connectors would cope without the internet Impact of the Internet Becoming Unavailable Tomorrow • Over a third of businesses would be seriously impacted if the Internet was to cease to exist • 15% would cease trading Respondents: Connected businesses (59%) Respondents: All Connecting Businesses (59%) E a s t M i d l a n d s D e v e l o p m e n t A g e n c y

20. Fact: M-Business is now established M-Business Adoption • Around 1 in 20 businesses use mobile internet technology • Whilst a further 18% are likely to use m-business, a further 77% do not see themselves using the technology Respondents: All Businesses (100%) E a s t M i d l a n d s D e v e l o p m e n t A g e n c y

21. Fact: Most non-connectors believe broadband is available Perceived Broadband Availability by Dial-Up and ISDN Users • Perceived “lack of availability” does not appear to be a significant barrier to adoption by ISDN and Dial-up connectors Respondents: : ISDN or dial-up users (15%) E a s t M i d l a n d s D e v e l o p m e n t A g e n c y

22. Fact: Already a quarter of broadband users want a faster connection Likelihood of Broadband Users Upgrading their Connection Speed • The majority of broadband connectors are happy with their speed • A quarter intend to upgrade to a higher speed and this group will be achieving the highest level of improvement through e-business Respondents: Broadband users (40%) E a s t M i d l a n d s D e v e l o p m e n t A g e n c y

23. Fact: Half of non-broadband connectors will get broadband Likelihood of Dial-Up/ISDN Users Upgrading to Broadband within 18 Months • More than half of all ISDN and dial-up connectors will move up to broadband within the next 18 months • This could mean that broadband connections will grow by a further 8% by the end of 2006 Respondents: ISDN or dial-up users (15%) E a s t M i d l a n d s D e v e l o p m e n t A g e n c y

24. Section 3Integration of E-Business Technologies • Investigating advance use of e-business • Importance of key business processes • Level of IT support for business processes • Level of integration between IT supported processes • Levels of online trading • How international trade activities are supported by the Internet • Online transaction with the public sector • Use of security measures E a s t M i d l a n d s D e v e l o p m e n t A g e n c y

25. Fact: Many key processes are not being supported by IT Importance of Business Processes and Usage of IT • Finance and accounts is consistently identified as the most important business process • Only 2/3rds of these businesses have introduced some form of IT-based finance solution • With other processes, such as CRM, the comparative figure is approximately 50% Respondents: All Businesses (100%) E a s t M i d l a n d s D e v e l o p m e n t A g e n c y

26. Fact: Around a quarter fully integrate their business processes with IT Integration of IT Enabled Business Processes by Sector • Level of IT integration is a key indicator of sophisticated use • A quarter of businesses with 2 or more applications do integrate them • This represents approximately 11% of all businesses Respondents: Businesses with ≥2 business processes supported by ICT businesses (47%) E a s t M i d l a n d s D e v e l o p m e n t A g e n c y

27. Fact: Around a quarter fully integrate their business processes with IT Degree of Integration of IT Enabled Business Processes by Number of Enabled Processes • The likelihood of processes being integrated increases significantly once the business has 5 or more IT-enabled processes • By the time a business has as many as 8 or more processes it is more likely to have fully integrated them than only partially integrated them Presented as: % of businesses with ≥2 business processes supported by ICT Respondents: Businesses with ≥2 processes supported by ICT (47%) E a s t M i d l a n d s D e v e l o p m e n t A g e n c y

28. Fact: More fully integrate their processes in Northamptonshire Integrated IT Enabled Business Processes by region • Again, Northamptonshire is leading, with the strongest level of integration of the 5 counties • The results for each of the other 4 counties are similar Respondents: Businesses with ≥2 business processes supported by ICT businesses (47%) E a s t M i d l a n d s D e v e l o p m e n t A g e n c y

29. No data available Fact: Levels of online selling have increased dramatically Provision of Customer Services Online • Practices like online order tracking have not increased over time • Meanwhile receiving orders and payments online has increased dramatically • Over 3 times as many businesses receive payments online when compared to 2003 Respondents: Connected businesses (59%) E a s t M i d l a n d s D e v e l o p m e n t A g e n c y

30. Fact: Most don’t know the proportion of online orders customers place Percentage of Orders Received Online • 1 in 10 that receive orders online achieve over 50% of their orders for their business in this way • The high percentage that “don’t know” could be explained in part by the interviewee not dealing with that side of the business Respondents: businesses that allow customers to order online (24%) E a s t M i d l a n d s D e v e l o p m e n t A g e n c y

31. Fact: Larger businesses are more likely to receive orders online Percentage of Businesses Receiving Orders Online by Business Size • Smaller business have something to learn from larger businesses in terms of online sales • Almost half of all businesses with over 50 employees now sell online Respondents: Connected businesses (59%) E a s t M i d l a n d s D e v e l o p m e n t A g e n c y

32. Fact: Most businesses don’t know the value of their website Percentage of Turnover via Website • 2/3rds of businesses with websites don’t know how much of their turnover the website generates • 10% of companies receive over 25% of their turnover from their website – directly or indirectly Respondents: : businesses with websites (38%) E a s t M i d l a n d s D e v e l o p m e n t A g e n c y

33. Fact: Allowing online ordering – those that don’t … probably won’t Future Provision of Online Customer Services • ¾ of businesses that don’t allow customers to trade online cannot see themselves providing this in the foreseeable future • Approximately 15% believe they will introduce facilities within a year or more Respondents: businesses that don’t allow online ordering or online payments (58%) E a s t M i d l a n d s D e v e l o p m e n t A g e n c y

34. No data available Fact: Ordering online has also increased Usage of Suppliers’ Online Services • Online ordering is traditionally more popular than online selling • The figures are rising steadily from the strong position in 2003 • Interestingly 50% more businesses are using the Internet to identify suppliers, surely placing greater pressure on sellers to have and maintain a quality website Respondents: Connected businesses (59%) E a s t M i d l a n d s D e v e l o p m e n t A g e n c y

35. Fact: Again most don’t know how much trade occurs in this way Percentage of Orders to Suppliers Placed Online • There are almost as many online sellers as online buyers • The difference is in volume of purchases, which is noticeably higher Respondents: : Connected businesses (59%) E a s t M i d l a n d s D e v e l o p m e n t A g e n c y

36. Fact: The internet is supporting international trade online % Turnover from international trade • 11% of all businesses consider themselves as selling to overseas customers through the Internet • Of this number, 10% conduct more than a quarter of business in this way whilst 52% don’t know • Only 16% of these companies have modified their website for this activity Respondents: : % of businesses that export via the internet (11%) E a s t M i d l a n d s D e v e l o p m e n t A g e n c y

37. Fact: 1 in 7 businesses interact with the public sector online Working with the Public Sector Online by Sector • There are significant variations in the percentages of businesses that transact with the public sector online • However, the proportions broadly match other measures of e-business sophistication for these sectors Respondents: Connected businesses (59%) E a s t M i d l a n d s D e v e l o p m e n t A g e n c y

38. Fact: When transacting with the public sector online – size matters Working with the Public Sector Online by Business Size • Although size does seem to matter the difference are not huge between 1-4 employee firms and 50+ employee firms Respondents: Connected businesses (59%) E a s t M i d l a n d s D e v e l o p m e n t A g e n c y

39. Fact: Most deal with the public sector online for information Activities Conducted Online with the Public Sector • Nearly 1 in 5 businesses that transact with the public sector online are involved with an e-procurement system of some sort Respondents: Communicate / Transact with Public Sector online (14%) E a s t M i d l a n d s D e v e l o p m e n t A g e n c y

40. Fact: Virus protection is installed in almost all businesses Security Measures Adopted • Broadband appears to have woken businesses’ eyes up to the the threat of the internet • Installing protection is not however the same as maintaining it • More sophisticated uses such as Data Encryption appears to be establishing itself now Respondents: Connected businesses (59%) E a s t M i d l a n d s D e v e l o p m e n t A g e n c y

41. Section 4The Value of E-Business • Importance of e-business • Increased profit from the influence of e-business E a s t M i d l a n d s D e v e l o p m e n t A g e n c y

42. Fact: Businesses think e-business will be important – sometime… Current and Future Importance of E-Business • Over half of all businesses think that e-businesses is not important or not important at all to their business • Broadly, those that think it is important are connected – those that don’t… aren’t • Their perception of future importance is better, but not dramatically so Respondents: All Businesses (100%) E a s t M i d l a n d s D e v e l o p m e n t A g e n c y

43. Fact: Importance varies significantly by county Current Importance of E-Business by Region • Overall, businesses in Northamptonshire are 50% more likely to think e-business is important than businesses in Derbyshire Respondents: All Businesses (100%) E a s t M i d l a n d s D e v e l o p m e n t A g e n c y

44. Fact: E-Business is more important for fast growing companies Importance of E-Business by Company Growth Prospects • The more positive the business is about its future growth prospects, the more important they consider e-business to be to them Respondents: Businesses expanding/growing (47%) or staying the same/retracting (51%) E a s t M i d l a n d s D e v e l o p m e n t A g e n c y

45. Fact: Many businesses are improving profits through e-business Increase in Profit Resulting from e-Business • 23% connected businesses could estimate increased profit from their involvement in e-business Respondents: Connecting businesses (59%) E a s t M i d l a n d s D e v e l o p m e n t A g e n c y

46. Section 5Attitudes to Present and Future Adoption • Factors that influence adoption • Attitudes of ICT decision makers and business owners • Attitudes to business growth E a s t M i d l a n d s D e v e l o p m e n t A g e n c y

47. Fact: The customer is the biggest driver for e-business adoption Factors Determining the Level of E-Adoption • Businesses appear to be driven by “customer demands” • “Supplier demands” appeared much lower down the scale • From a strategy perspective this is a healthy result – most connected businesses are being driven by the right things Respondents: Connected businesses (59%) E a s t M i d l a n d s D e v e l o p m e n t A g e n c y

48. Fact: Customer is even more important for fast growing companies Factors Determining E-Adoption by Company Growth Prospects • Again, growth companies are the most focused on their objectives for their internet activities Respondents: Connected Businesses (59%) E a s t M i d l a n d s D e v e l o p m e n t A g e n c y

49. Fact: The main reason for non-adoption is non-relevance Reasons for Non-Adoption of Email • With email, as with all measures of non-adoption, the consistent theme is that businesses will not adopt if they do not see the relevance • Many are correct, others could benefit from some persuasion (they don’t know what they don’t know) Respondents: businesses that have a PC but don’t use email (14%) E a s t M i d l a n d s D e v e l o p m e n t A g e n c y

50. Fact: Most that don’t have a PC won’t get one soon Plans for Introduction of PCs by Non-Adopters • The vast majority of businesses without a PC are very unlikely to invest in one • 1 in 12 “will” • 1 in 20 “might” Respondents: businesses that do not have a PC (30%) E a s t M i d l a n d s D e v e l o p m e n t A g e n c y